Optus has been ordered by the Federal Court to cough up $5.26 million in civil pecuniary penalties for breaching the Trade Practices Act on its advertising of various ‘Think Bigger’ and ‘Supersonic’ broadband internet plans.
This is the largest civil penalty for a consumer protection matter that has been handed to a company in court. The Australian Competition and Consumer Commission (ACCC) began taking this latest action against the telco in September last year.
“Such a penalty will operate as an appropriate deterrent not only to Optus but also to other traders who might be tempted by the thought that misleading advertising is a profitable strategy. These penalties will demonstrate that it is not,” Justice Perram said.
ACCC Chairman, Graeme Samuel, said the decision sent a clear message that misleading consumers was not a legitimate business strategy.
“The entire telecommunications industry needs to sit up and take notice. This conduct is not acceptable, and the ACCC will seek the harshest penalties the law allows.” Samuel said.
In advertising these broadband plans, Optus represented that for a monthly payment, a consumer would receive a headline data allowance of broadband which was then split into peak (midday to midnight) and off-peak (midnight to midday) data allowances.
The Australian Competition and Consumer Commission alleged that Optus had not sufficiently disclosed the service would be speed limited to 64kbps at all times once a consumer exceeded their peak data allowance. The consequence was that any unused off-peak data would no longer be available at a broadband speed.
Optus launched the ‘think bigger’ campaign in April 2010 and the ‘supersonic’ campaign in August 2010.
The plans dealt with in these proceedings include:
The “Think Bigger” Internet broadband plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $49.99
- 150GB of data (75GB peak + 75GB off-peak) for $59.99<>/ul>
- The “Supersonic” Internet broadband with Premium Speed Pack plans offering:
- 120GB of data (50GB peak + 70GB off-peak) for $69.99,
- 150GB of data (75GB peak + 75GB off-peak) for $79.99, and
- 170GB of data (85GB peak + 85GB off-peak) for $89.99.
The ACCC has taken enforcement actions against a number of telecommunications companies for misleading and deceptive practices in advertising in the past few months.
In February, the Federal Court found that advertisements published by Optus promoted its broadband plans as “unlimited” were misleading and deceptive.
Another decision by the Federal Court in June imposed penalties against Global One Mobile Entertainment and 6G for false and misleading advertisements regarding mobile premium services.
In May, the ACCC issued and Optus paid 27 infringement notices totalling $178,200 for alleged misrepresentations concerning its “Max Cap” advertisements for pre-paid mobile phone services.
In January, Optus provided the ACCC with court enforceable undertakings in relation to alleged misrepresentations to consumers about their statutory rights in relation to faulty mobile phones.